Investor Presentation • Feb 14, 2023
Investor Presentation
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Oslo, 14 February 2023
Operational update Financial update Market
Outlook and summary
Completed, ongoing and upcoming projects
* Pay-out on 9 May 2023.
EBITDA** margin (NGAAP)
Per cent
Per cent
* Profit before interest, taxes, depreciation and amortization.
** Operating profit before depreciation, gains (losses) and profit from associated companies
Highlights Operational update Financial update Market Outlook and summary
| Construction | Increased due to geopolitical unrest and shortages after COVID-19 pandemic • |
|---|---|
| cost | New projects in certain areas postponed due to high construction costs • |
| Construction costs now falling • |
|
| Risk-minimizing sales model • |
|
| Operating | - Minimum presale of 60% and fixed construction cost secured for all units under construction |
| model | Temporary adjustment to operating model, adapting to market uncertainty • |
| - Additional contractual reservation: Construction start subject to construction cost |
|
| Started construction of 517 units in 2022 • |
|
| Land bank | Acquisition of new land in 2022 for ~800 units (in Stockholm, Oslo and Drammen) • |
Note: Sales value is adjusted for Selvaag Bolig's share in joint ventures.
Units sold are sales contracts entered into with customers pursuant to the Norwegian Housing Construction Act. In accordance with the IFRS, they are recognised as income on delivery.
Note: Sales value is adjusted for Selvaag Bolig's share in joint ventures.
*Total columns show Selvaag Bolig's gross sales. **Columns excluding dotted areas show Selvaag Bolig's net sales.
Units sold are sales contracts entered into with customers pursuant to the Norwegian Housing Construction Act. In accordance with the IFRS, they are recognised as income on delivery.
Note: Number of units are adjusted for Selvaag Bolig's share in joint ventures.
· 75% of 2023 completions sold by Q4 2022
· 67% of units under construction sold by Q4 2022
Note: Sales value and number of units are adjusted for Selvaag Bolig's share in joint ventures. * Includes: Oslo, Lørenskog, Follo, Tønsberg, Asker.
Highlights Operational update Financial update Market Outlook and summary
* EBITDA is profit before interest, taxes, depreciation and amortization. EBITDA adjusted is excluding financial expenses included in project costs.
Operating revenues (IFRS)
* EBITDA is profit before interest, taxes, depreciation and amortization.
** EBITDA adjusted is excluding financial expenses included in project costs. The difference compared to reported EBITDA is due to interest, taxes, depreciation and amortization in JVs.
*** Excluding other gains of NOK 1 029m from UP transaction
* Construction costs are exclusive of financial expenses in the segment reporting (NGAAP). Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies.
NOK million
Note: Items of less than NOK 55 million are excluded from the cash flow overview.
613
Net change in borrowings
Cash and cash equivalents at 31 December 2022
NOK million
1 218
(60 Grader Næringsmegling)
* SBO land bank not included in the UP transaction
NOK million
| Loan facility | Drawn at 31.12.22 (NOKm) |
Interest rate margin* |
|
|---|---|---|---|
| 1 | Construction loan facilities from a range of Nordic credit institutions |
1 678 | 1.65% - 2.40% |
| 2 | Debt to Urban Property** | 582 | 3.75%*** |
| 3 | Land loan facilities from a range of Nordic credit institutions |
226 | 1.50% - 2.95% |
| 4 | NOK 300 million revolving credit facility from DNB maturing in 2025 |
0 | 2.50% - 3.00% |
| 5 | NOK 150 million working capital facility from DNB with annual renewal |
0 | 2.10% |
Total Q3 2022 net interest-bearing debt NOK 1 792 million
Land loan Debt to Urban Propery Construction loan
NOK million
** Repurchase agreements portfolio B and seller credits. *** + 2.00% fee at property repurchase.
* Margin added to 3m NIBOR.
*Excluding earnings and dividend from UP transaction.
* Net income attributable to shareholders in Selvaag Bolig ASA.
** Based on equity at the start of the period (attributed to shareholders in Selvaag Bolig ASA).
Q1 2020 Net income excluding Other gains of NOK 1 029m
Highlights Operational update Financial update Market
Outlook and summary
Sources: Historic data: Statistics Norway (SSB), Forecasted housing completions: SA – Hawii Analyse, Forecasted housing need next 5 years: Prognosesenteret. Note: Number of persons per household in Oslo: 1.90.
Note: Housing need calculated on parameters such as number of persons per household, lag on housing development, housing demolition. Note: Completions exclusive of student- and senior housing.
* Estimates based on actual sales, future sales starts, and historical data.
** Uncertainty due to project lead-time.
Sources: Historic data: Statistics Norway (SSB), Forecasted housing completions: Hawii Analyse, Forecasted housing need next 5 years: Prognosesenteret. Note: Number of persons per household in Oslo: 1.90.
Note: Housing need calculated on parameters such as number of persons per household, lag on housing development, housing demolition. Note: Completions exclusive of student- and senior housing.
* Akershus county = Viken county ex. Buskerud and Østfold.
** Estimates based on actual sales, future sales starts, and historical data.
25 *** Uncertainty due to project lead-time.
Source: SA – Hawii analyse. * Including withdrawls
Source: SA – Hawii analyse. * Including withdrawals
Source: Hawii analyse, Statistics Norway.
* Akershus county = Viken ex. counties Buskerud and Østfold.
** Population at YE 2022.
29
Source: Eiendomsverdi, Statistics Norway.
Incudes projects with 2 units or more
* Akershus county = Viken ex. counties Buskerud and Østfold.
** Includes Stavanger, Sola, Sandnes, Randaberg.
*** Population at 30.09.2022.
Stavanger
Bergen
Source: Eiendom Norge.
• Includes Stavanger, Sola, Sandnes, Randaberg.
** New method for calculation from 2018.
Stavanger-area***
Trondheim
Source: Eiendom Norge.
* Nominal price change.
31 *** Includes Stavanger, Sola, Sandnes, Randaberg.
** New method for calculation from 2018.
Bjerke | Oslo
Lørenskog stasjonsby | Greater Oslo
Skårerbyen | Greater Oslo
Landås | Greater Oslo
Ballerud | Greater Oslo
Lørenvangen| Oslo
Lilleaker | Oslo
Highlights Operational update Financial update Market Outlook and summary
· Potential for app. 1 100 additional units during 2023, dependent on market condition
· Solid results considering few units delivered
* Pay-out on 9 May 2023.
Next event: 1 st quarter 2023 24 May 2023
Illustrative risk profile at construction start of a NOK 100 million project with a 12% margin
• Construction starts after minimum 60% pre-sale
• Sales subject to project cost reservations
• Remaining risk very limited
Illustrative risk profile at construction start of a NOK 100 million project with a 20% margin
• Construction starts after minimum 60% pre-sale
• Sales subject to project cost reservations
• Remaining risk very limited
Sources: Historic data: Statistics Norway (SSB), Forecasted housing completions: Hawii Analyse, Forecasted housing need next 5 years: Prognosesenteret. Note: Number of persons per household in Oslo: 1.90.
Note: Housing need calculated on parameters such as number of persons per household, lag on housing development, housing demolition. Note: Completions exclusive of student- and senior housing.
* Akershus county = Viken county ex. Buskerud and Østfold.
** Estimates based on actual sales, future sales starts, and historical data.
44 *** Uncertainty due to project lead-time.
* Net income attributable to shareholders in Selvaag Bolig ASA.
** Based on equity at the start of the period (attributed to shareholders in Selvaag Bolig ASA).
The company aims to pay dividends of minimum 60 per cent of net annual profit, paid in two instalments over the year. However, the size of the dividend will be weighed against the company's liquidity forecasts and capital adequacy.
The company aims to pay dividends of minimum 40 per cent of net annual profit, paid in two instalments over the year. However, the size of the dividend will be weighed against the company's liquidity forecasts and capital adequacy.
The company will maintain an equity ratio of minimum 30 per cent.
Source: Oslo Børs.
* All numbers in brackets from previous quarter.
| Shareholder | of # shares |
% share |
|---|---|---|
| SELVAAG AS |
50 180 087 |
53 5% |
| Skandinaviska Enskilda Banken AB |
4 796 067 |
1% 5 |
| PARETO INVEST NORGE AS |
4 671 772 |
0% 5 |
| VERDIPAPIRFONDET BERG GAMBA ALFRED |
3 266 051 |
3 5% |
| The Northern Trust Comp, London Br |
2 186 000 |
3% 2 |
| Chase Bank, ., London JPMorgan N A |
912 218 1 |
2 0% |
| SANDEN EQUITY AS |
1 200 000 |
3% 1 |
| MUSTAD INDUSTRIER AS |
136 363 1 |
2% 1 |
| The Northern Comp, London Trust Br |
840 200 |
0 9% |
| Skandinaviska Enskilda Banken AB |
750 000 |
0 8% |
| AS BANAN II |
750 000 |
0 8% |
| Landkreditt Utbytte |
700 000 |
7% 0 |
| Brothers Harriman Co Brown & |
684 200 |
0 7% |
| Harriman Brown Brothers Co & |
513 705 |
5% 0 |
| Morgan Stanley Co International & |
496 588 |
0 5% |
| Sverre Molvik |
492 814 |
0 5% |
| Øystein Klungland |
487 582 |
5% 0 |
| The Bank of York Mellon SA/NV New |
450 810 |
0 5% |
| THRANE-STEEN NÆRINGSBYGG AS |
342 249 |
4% 0 |
| Bank Avanza AB |
331 199 |
0 4% |
| Total 20 largest shareholders |
76 187 905 |
81.3% |
| Other shareholders |
17 577 783 |
7% 18 |
| Total number of shares |
93 765 688 |
100.0% |
* Further information regarding shareholders is presented at: http://sboasa.no/en
Trondheim 272 units
Stockholm 743 units
Greater-Oslo
8 313 units
Land bank exposure
Trondheim 272 units
Geographical spread
8 313 units
Greater-Oslo Bergen 558 units
Stavanger 664 units
Land-bank strategy
Note: The numbers represent the size of the land portfolio at 31 December 2022. All numbers are adjusted for Selvaag Bolig's share in joint ventures. The total portfolio is ~10 550 units. Of these ~5 250 are options and obligations to buy.
51
• Service offerings and good neighbourliness, make every day living easier
Source: Eiendomsverdi.
Source: Eiendomsverdi.
Source: Eiendomsverdi.
Source: Eiendomsverdi.
* Includes Stavanger, Sola, Sandnes, Randaberg.
| Area | % chg -1M | % chg. -1M seasonal adj. |
% chg YtD |
% chg -12m | % chg -5Y |
% chg -10Y |
Average price/sqm (NOK) |
Average price (NOK) |
|---|---|---|---|---|---|---|---|---|
| Oslo | 2.8% | 0.2% | 2.8% | -0.1% | 30.9% | 76.8% | 88 198 | 6 219 698 |
| Bergen | 3.2% | -0.6% | 3.2% | -1.8% | 20.9% | 39.6% | 49 405 | 3 987 026 |
| Trondheim | 1.1% | -1.3% | 1.1% | -1.4% | 17.1% | 38.7% | 54 620 | 4 057 946 |
| Stavanger-area** | 5.1% | 1.0% | 5.1% | 3.6% | 18.7% | 4.2% | 42 625 | 4 265 737 |
| Norway | 3.0% | 0.0% | 3.0% | -0.3% | 26.6% | 53.3% | 51 911 | 4 367 609 |
Source: Eiendom Norge.
* Nominal price change.
** Includes Stavanger, Sola, Sandnes, Randaberg.
*The numbers are adjusted for Selvaag Bolig's share in joint ventures
| Lørenskog | 1 576 units | |
|---|---|---|
| Lørenskog Stasjonsby | 613 units | |
| Skårer Bolig | 325 units | |
| LSV | 500 units | |
| Pallplassen | 138 units | |
| 1 576 units |
Lillestrøm | |
| Bjerke | 1 400 units | |
| Bjerke | 1 400 units | |
| Oslo South | 315 units | |
| Gjertsrud Stensrud | 315 units | |
| Follo/Østfold | 1 532 units | |
| Langhus Ski |
48 units 90 units |
|
| Grenseveien | 314 units | |
| Fredrikstad | 900 units |
*The numbers are adjusted for Selvaag Bolig's share in joint ventures
*The numbers are adjusted for Selvaag Bolig's share in joint ventures.
Fee structure:
Eliminates need for equity when purchasing land, as SBO pay 50% of purchasing price at construction start and 50%
Benefits for Selvaag Bolig:
land plots
(break fee)
More efficient and predictable funding of existing and new
Increases competitiveness when making land purchases - Down-side risk for SBO limited to 48 months option premium
Selvaag Bolig sold most of its land bank to Urban Property in January 2020, entering a long-term and strategic partnership. Urban Property is a financially sound, well capitalized and predictable partner.
1) + 2.5% transaction fee and option price (Nibor + 375bps).
Delivery in accordance with expectations
Project margin 18%
Delivery to customers
| Acquire and refine land for development |
Project design | Contracting, marketing and pre-sales |
Construction and sales | |
|---|---|---|---|---|
| Project margin 20% |
· Buy (i) options on unzoned land or (ii) ready-to-build land · Opitmize project for zoning process |
· Optimize project design - Net/gross-factor - Tailor to meet market demand price/quality · Plan and prepare for construction |
· Pre-marketing · Competitive tender for construction · 60% pre-sale before construction start |
· Fixed-price contracts · Prices on remaining 40% increased gradually · Construction financed with construction loans |
| 15% | ||||
| 10% | ||||
| 5% | ||||
| 0% | ||||
| Land acquired with minimum 10% project margin 1) Assuming flat market development. |
Adding value through building permits and area utilisation |
Value added when achieving 60% pre-sale |
Maximising price in accordance with market |
· Target 100% sale at delivery
Example apply a land ownership period in Urban Property of 3-4 years, and a finance cost of 4% on all capital employed in the project.
| 1 | PROJECT CALCULATIONS 2 |
PROJECT CALCULATIONS | ||
|---|---|---|---|---|
| BEFORE URBAN PROPERTY | AFTER URBAN PROPERTY | |||
| Figures for illustration purposes only | MNOK | % | MNOK | % |
| Sales revenue | 348.5 | 100.0% | 348.5 | 100.0% |
| Construction cost | 195.8 | 56.2% | 195.8 | 56.2% |
| Land cost | 69.7 | 20.0% | 85.2 | 24.4% |
| Other costs | 24.5 | 7.0% | 24.5 | 7.0% |
| Project cost | 290.0 | 83.2% | 305.5 | 87.7% |
| Net finance (excluding Urban Property) | 16.8 | 4.8% | 5.3 | 1.5% |
| TOTAL REVENUE | 348.5 | 100.0% | 348.5 | 100.0% |
| TOTAL COST | 306.8 | 88.0% | 310.9 | 89.2% |
| PROFIT | 41.7 | 12.0 % | 37.7 | 10.8% |
| Internal rate of return (IRR) | 12.2% | 28.0% | ||
2
In total marginal lower project margins, but significantly increased IRR and RoE
* Includes project revenues only.
** Project margins are exclusive of overhead costs. Construction costs are exclusive of financial expenses in the segment reporting (NGAAP).
NOK million
Total land bank Options and obligations to acquire Land bank in balance sheet
Units
| 753 | ||||
|---|---|---|---|---|
| 1 265 | 394 | 554 | ||
| 1 033 | 636 | 255 | ||
| 439 | 220 |
1 401 1 401
Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Sales value of sold units (net) Sales value of sold units (gross)
NOK million
Untis sold net Units sold gross
Units
| (figures in million) NOK |
Q4 2022 |
Q4 2021 |
2022 | 2021 |
|---|---|---|---|---|
| Total operating revenues |
668 8 |
553 8 1 |
2 896 4 |
3 402 7 |
| Project expenses |
(514 4) |
(1 9) 212 |
(2 7) 313 |
(2 4) 617 |
| operating Other expenses |
(79 8) |
(78 0) |
(236 3) |
(236 4) |
| Associated companies and joint ventures |
(8 2) |
9 0 |
85 7 |
109 7 |
| EBITDA | 66.3 | 271.9 | 432.1 | 658.6 |
| Depreciation amortisation and |
(2 5) |
(2 6) |
(9 7) |
(10 3) |
| Other gains (loss) |
- | - | - | - |
| EBIT | 63.8 | 269.4 | 422.4 | 648.3 |
| financial Net expenses |
2 8 |
5 1 |
2 7 |
(3 0) |
| Profit/(loss) before taxes |
66.6 | 274.4 | 425.1 | 645.3 |
| Income taxes |
(21 2) |
(56 0) |
(86 3) |
(140 4) |
| income Net |
45.4 | 218.5 | 338.9 | 504.9 |
| income for period attributable Net the to: |
||||
| Non-controlling interests |
0 0 |
(0 0) |
0 0 |
(0 0) |
| Shareholders in Selvaag Bolig ASA |
45 4 |
218 5 |
338 8 |
504 9 |
| EBITDA-margin | % 9 9 |
% 17 5 |
% 14 9 |
% 19 4 |
| EBITDA-margin uten TS-andel og gevinst |
2 % 11 |
16 9 % |
12 0 % |
16 % 1 |
| EBITDA-margin justert TS-andel og gevinst uten |
14 9 % |
| (figures in NOK million) |
Q4 2022 |
Q3 2022 |
2021 |
|---|---|---|---|
| Intangible assets |
383 4 |
383 4 |
383 4 |
| equipment Property, plant and |
8 2 |
8 0 |
7 4 |
| Investments in associated companies and joint ventures |
234 7 |
235 7 |
354 7 |
| Other non-current assets |
345 3 |
315 1 |
302 3 |
| Total non-current assets |
971.6 | 942.2 | 047.7 1 |
| Inventories (property) |
4 273.2 |
4 124.8 |
4 072.5 |
| - Land | 719 3 |
805 2 |
1 033 8 |
| - Land held for sale |
|||
| - Work in progress |
3 384 2 |
3 189 5 |
2 872 2 |
| - Finished goods |
169 7 |
130 2 |
166 4 |
| receivables Other current |
92 1 |
249 7 |
134 3 |
| Cash and cash equivalents |
612 7 |
774 8 |
527 4 |
| Total current assets |
4 978.0 |
5 149.4 |
4 734.2 |
| TOTAL ASSETS |
5 949.6 |
6 091.6 |
5 782.0 |
| Equity attributed to shareholders in Selvaag Bolig ASA* |
2 338 1 |
2 279 1 |
2 461 1 |
| Non-controlling interests |
8 7 |
8 7 |
8 7 |
| equity Total |
2 345.9 |
2 286.9 |
2 468.8 |
| Non-current interest-bearing liabilities |
400 4 1 |
477 2 1 |
2 777 |
| Other non interest-bearing liabilities non-current |
382 3 |
401 6 |
341 0 |
| liabilities Total non-current |
1 782.7 |
1 878.8 |
1 118.2 |
| Current interest-bearing liabilities |
085 4 1 |
090 0 1 |
370 1 5 |
| Other non interest-bearing liabilities current |
735 5 |
835 9 |
824 4 |
| Total current liabilities |
1 821.0 |
1 925.9 |
2 194.9 |
| TOTAL EQUITY LIABILITIES AND |
949.6 5 |
6 091.6 |
782.0 5 |
| (figures in NOK million) |
Q4 2022 |
Q4 2021 |
2022 | 2021 |
|---|---|---|---|---|
| cash flow from operating activities Net |
(51 6) |
721 1 |
63 4 |
392 6 |
| Net cash flow from investment activities |
(10 6) |
(2 0) |
239 8 |
167 1 |
| Net cash flow from financing activities |
(99 9) |
(801 4) |
(218 0) |
(917 6) |
| in equivalents Net change cash and cash |
(162 1) |
(82 2) |
85 2 |
(357 9) |
| Cash and cash equivalents at start of period |
774.8 | 609.7 | 527.4 | 885.3 |
| equivalents of period Cash and cash at end |
612.7 | 527.4 | 612.7 | 527.4 |
| Q4 21 |
Q1 22 |
Q2 22 |
Q3 22 |
Q4 22 |
|
|---|---|---|---|---|---|
| Units sold |
276 | 201 | 120 | 83 | 44 |
| Construction starts |
456 | 113 | 190 | 68 | 146 |
| Units completed |
334 | 74 | 210 | 142 | 160 |
| Units delivered |
324 | 77 | 217 | 144 | 147 |
| Units construction under |
1 323 |
1 361 |
1 342 |
1 268 |
1 253 |
| Proportion of sold units under construction |
67 % |
73 % |
% 75 |
73 % |
67 % |
| Completed unsold units |
25 | 19 | 13 | 19 | 31 |
| of units construction (NOK million) Sales value under |
6 736 |
7 034 |
6 807 |
6 225 |
6 408 |
Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies.
| Property | |||
|---|---|---|---|
| (figures in million) NOK |
development | Other | Total |
| Operating revenues |
506.8 | 18.9 | 525.7 |
| Project expenses |
(374.0) | 1.6 | (372.4) |
| Other operating expenses |
(13.4) | (68.9) | (82.3) |
| (percentage of completion) EBITDA |
119.4 | (48.5) | 70.9 |
| Note: Construction costs are exclusive of financial expenses in the segment reporting. |
|||
| IFRS EBITDA for the quarter, per segment |
|||
| Operating revenues |
650.0 | 18.9 | 668.8 |
| Project expenses |
(516.0) | 1.6 | (514.4) |
| Other operating expenses |
(13.4) | (66.4) | (79.8) |
| of income (losses) from associated companies Share |
|||
| joint and ventures Other gain (loss), net |
(8.2) - |
- | (8.2) |
| EBITDA | 112.3 | (46.0) | 66.3 |
| Units in production |
1 253 |
N/A | N/A |
| Units delivered |
147 | N/A | N/A |
Note: EBITDA is operating profit before depreciation, gains (losses) and profit from associated companies.
| Property | |||
|---|---|---|---|
| (figures in NOK million) |
development | Other | Total |
| Operating revenues |
2 794.4 |
61.7 | 2 856.0 |
| Project expenses |
(2 234.3) |
1.0 | (2 233.3) |
| operating Other expenses |
(35.0) | (210.8) | (245.8) |
| (percentage of completion) EBITDA |
525.1 | (148.2) | 377.0 |
| Construction are exclusive of financial expenses in reporting. Note: costs the segment |
|||
| IFRS full EBITDA year per segment |
|||
| Operating revenues |
2 834.7 |
61.7 | 2 896.4 |
| Project expenses |
(2 314.7) |
1.0 | (2 313.7) |
| Other operating expenses |
(35.0) | (201.3) | (236.3) |
| Share of income (losses) from associated companies |
|||
| and joint ventures |
85.7 | - | 85.7 |
| EBITDA | 570.8 | (138.7) | 432.1 |
| Units in production |
1 253 |
N/A | N/A |
| Units delivered |
585 | N/A | N/A |
Source: Selvaag Bolig and Eurostat.
Household debt in % of net disposable income (2021) Homeownership rate (2020)
Source: OECD, Statista.
Source: Statistics Norway, Samfunnsøkonomisk Analyse.
* Estimated annual growth for the next 5-year period.
** Number of persons per household in Norway.
Source: Eiendomsverdi.
* Stavanger area includes: Randaberg, Sandnes, Sola, Stavanger.
Share of total population in Oslo and Akershus Share of total population growth in Oslo and Akershus
Source: Statistics Norway.
Homeownership rate among immigrants in Norway (per year living in Norway)
Source: Statistics Norway.
Source: Bloomberg, UN.
* Central bank rates.
Source: Monetary Policy Report 4|22, Central Bank of Norway.
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